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Ezra Klein takes on the question of why doctors may be over-prescribing drugs. He writes,

. . . . Doctors make money from prescribing treatments. If, as in England, they made money by not prescribing treatments (i.e, through capitation pay, where they're paid
X amount per patient, rather than per treatment), they would prescribe
more carefully. You could even set up those salaries such that doctors
made approximately what they do now (so they don't rebel), but they
kept more of it as profit if they didn't spend so much on treatments.
Over time, that would radically slow the growth in health spending. So
too would increasing the supply of doctors and increasing the
responsibilities of nurse practitioners, both of which the doctor's
guilds oppose.

But there's more than just guild greed at work. Methods of
rationing, like capitation, are a hard sell to voters who want to
believe they'll get not only every treatment they could plausibly
benefit from, but quite a few they couldn't plausibly benefit from. In
general, patients have a Samuel Gompers attitude towards medical
treatment: They want more. Doctors don't make much money when they
prescribe unnecessary antibiotics for colds. They do it because
patients want antibiotics -- they feel better knowing something
has been done. And doctors want them to feel better. . . . This isn't a guild protecting itself so
much as human nature pointing in a possibly harmful, and definitely
pricey, direction. Doctors take an oath to heal, they don't take an
oath to cut health spending.

Additionally,
doctors prescribe a lot of useless treatments because, in the
aggregate, they don't know what works. It's a bit shocking and a bit
scary to realize how little evidence we actually have on treatment
effectiveness. Recent years, for instance, have cast a lot of doubt
on both angioplasties and cardiac bypass surgery. Lumbar back surgeries
are widely thought to be bunk in health policy circles, but lots of
doctors still think they work (after all, it's surgery, it must work!). . . .

If you reworked all the incentives for doctors tomorrow, they
wouldn't overprescribe as much, but they might not get any better at
prescribing care that's actually of high quality. That sort of
transformation requires a whole lot of evidence, which means funding a
whole lot of comparative effectiveness research. Currently, that's not
happening, and so a lot of the data comes from medical device
manufacturers, pharmaceutical companies, and so forth. . . . If we spent a
couple hundred million a year testing treatments, we'd make it back
tenfold in cuts to total health spending.